vs. ) CASE NO. 82-3012
Respondent. )
Pursuant to notice, an administrative hearing was held before Arnold H. Pollock, Hearing Officer, on January 11, 1983, in Jacksonville, Florida. The issue for determination is whether Respondent's license as an insurance agent should be revoked or otherwise disciplined for violations of the Insurance Code, as charged in the Administrative Complaint dated August 27, 1982, and amended September 24, 1982, and December 28, 1982.
David Yon, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301
For Respondent: S. Perry Penland, Esquire
Penland, McCranie & Shad, P.A. Suite 1103, Blackstone Building Jacksonville, Florida 32202
By Administrative Complaint filed on August 27, 1982, and subsequently twice amended on September 24 and December 28, 1982, the Respondent has been charged with certain violations of the Insurance Code, Chapter 626, Florida Statutes. In summary form, the allegations alleged in the six counts of the Administrative Complaint indicated that while serving as an agent of Independent Life and Accident Insurance Company in Jacksonville, Florida, during the months of May, June, July, and August, the Respondent collected from five different policyholders premium payments for their policies in the total amount of $361.60 and thereafter remitted only $126.18 of that sum to the company.
In support of the factual allegations of the Complaint, Petitioner presented the testimony of Annie McKibben, Wilma Robinson, Edward Cooper, Evie Bennett, and Evelyn Reynolds, the policyholders in question, and of Kerry Fossett and A. L. Baucom, the former a field auditor for the company and the latter an assistant vice president and agency secretary for the company. In
addition, Petitioner's Exhibits A through L were received into evidence. Respondent testified in his own behalf and presented the testimony of Catherine DiPerna, Gracie Williams, and Jennie Wilder. Respondent's Exhibits 1 through 13 were also received into evidence.
Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:
At all times relevant to this proceeding, Respondent, Barrett Chambers Miller, was licensed as an agent with Independent Life and Accident Insurance Company in the State of Florida.
On March 11, 1981, Respondent signed a Combination Agent's Contract Form 1-7759 with the Independent Life and Accident Insurance Company.
Part I, Article 2, of the contract requires the agent to "pay over all monies collected to the manager of the district" or to his representative and forbids the agent to retain any monies collected for any purpose.
Part I, Article 1, of the contract requires the agent to "keep true records of the business on the books [and] to forward to the company on company forms a true account each week of his business.
Among the "company forms" routinely used by agents in the conduct of their business are: (1) the Premium Receipt Book, (2) the Collection Book, (3) the Ordinary Remittance Report, (4) the Field Accounting Route List, and (5) the Balance Due Account Deficiency Sheet.
The Premium Receipt Book is used to record the premium paid by the policyholder; is annotated whenever a premium is paid; and bears the premium paid, the date paid, and the signature or initials of the agent receiving the payment.
The Collection Book page bears the name and address of the premium payer, the policy number(s), the type of plan, some statistics as to the insured, the death benefit, and the date on which the premium is paid each month.
The Ordinary Remittance Report carries, as to each policy on the agent's debit (list of policyholders to be serviced), an account of the periodic premium collections recorded during the week covered by the report.
The Field Accounting Route List is used by the agent to indicate weekly collections on weekly premium payments, and the Balance Due Account Deficiency Sheet is used to charge back deficiencies to the agent's account that are found in his collections turned in weekly.
Count I:
On May 26, 1981, Annie McKibben, owner of Policies A 39189 on the life of Carol L. Cox, A 39190 on the life of Ronny Cox, Jr., and A 39191 on the life of Stacey Cox, paid to the Respondent by check payable to Independent Life the amount of $13.96, total premium for the three policies listed. The premium card for that policy reflects an altered payment of $13.98 with the signature "B. C. Miller" for the May 1981 payment on the 26th of that month. The Collection Book
page reflects collection on May 26, 1981. The Ordinary Remittance Report for the week of May 25, 1981, shows collection of $13.96. There is no Field Accounting Route List in evidence for this account, but the Balance Due Account Deficiency Sheet for the week of August 17, 1981, reflects deficiencies for money not turned in for all three policies for the collections made thereon on May 26, 1981.
The check with which Mrs. McKibben paid the premiums in question was subsequently deposited to the account of Independent Life at the Florida First National Bank of Jacksonville.
Respondent denies any wrongful withholding on this account.
Count II:
On some date in June, 1981, Wilma L. Robinson, owner of Policies B 03628 and A 67660, both in her name, wrote Check No. 348 on the Flagship Bank of Jacksonville in the amount of $48.68, payable to Independent Life Insurance and reflecting the notation "Ins. June." Someone, she is not sure who, gave that check to a representative of the company. Her payment book reflects a payment of $23.03 received by B. C. Miller on June 16, 1981. The Collection Book reflects collection on June 16, 1981. The Remittance Report reflects collection on June 16, 1981. The Deficiency Account Sheet, however, reflects a deficiency for money not turned in in the total amount of $23.03.
Mrs. Robinson is not sure to whom her check was given. She was sick during that period, and it may be that her husband actually delivered the check; and in early 1981, she began mailing her payment checks in. However, to the best of her knowledge, she had never seen Respondent until he came to her home on January 4, 1983.
Count III:
In June, 1981, Mrs. Evelyn Reynolds had four policies with Independent Life: 017872 on Debbie Spivey, A0037496 on Angela Reynolds, A0010351 on Sherry
D. Reynolds, and A14776 on Robert Reynolds. Though she cannot identify to whom she made her payment that month, her routine practice was to make the payment monthly, sometimes by check and sometimes by cash. On some occasions, Respondent and a Mr. McGroarty from the company both came to get her payment. On some occasions, she left the payment with her mother and does not know to whom it was made.
Mrs. Reynolds' payment book shows a payment of $24.02 made on June 9, 1981, with the initials "BCM" reflected in the block for the signature of the agent. The Collection Book page shows collection on June 9, 1981; and the Remittance Report does as well, but the Deficiency Sheet shows a deficiency of
$24.02 for monies not turned in but collected that date.
Mr. Miller unequivocally denies the initials in the payment book were put there by him, nor was any entry on the Collection Book page relating to this account put there by him.
Count IV:
Mrs. Evie Bennett does not recognize the Respondent. She has only seen him once before in her life, on New Year's Day, 1983, when he came to her
house. She did not meet with him on August 4, 1981, and did not make any payments to him.
Her payment book for Policy No. B0000499 in her name reflects a premium payment in the amount of $9.51 made on August 4, 1981; and the entry in the block for the signature of the agent reads "Receipt Miller." The Collection Book page for this account reflects a collection on August 4, 1981, of $9.51. Other pertinent documents reflect a deficiency by reason of monies not turned in of $9.51 for this collection.
Mr. Miller denies the entries in both the Payment Receipt Book and the Field Report were made by him.
Mr. Edward Cooper owned Policies 05 18285A on Edward Thomas; and 0536115A and 0536115B, both on Mary Cooper. He normally paid his premiums by check once a month to whatever agent came to collect. He does not know to whom he made the payment on July 7, 1981, nor does he know whether he paid on that day by check or cash, notwithstanding his written statement on November 24, 1981, witnessed by Mr. Pat McGroarty, indicates he paid the payments on his Premium Receipt Book to the Respondent. The payment card for these policies reflects that on July 7, 1981, an individual who used the signature "B. C. Miller" received payment of $20.80, representing premiums of $4.16 for each of five weeks including June 29, 1981; July 6, 1981; July 13, 1981; July 20, 1981; and July 27, 1981.
The Field Accounting Route List for this Respondent in the period in question reflects a remittance of $16.64 with a shortage of $4.61, which shortage is also reflected on the deficiency page.
Mr. Miller admits the signature on the payment card is his, but contends the card was altered.
Mr. Kerry Fossett is a field auditor for Independent Life Insurance Company and in November, 1981, was requested to conduct an audit of Respondent's agency. As a part of the audit, he checked policyholders' receipt books and compared them to the agent's account. His audit showed discrepancies on 19 premium receipt cards for a total shortage of $141.75, of which amount the sum of $100.98 occurred when Respondent had the agency. The remainder of the shortage occurred either before or after Mr. Miller was in the job.
During the course of the audit, Mr. Fossett found at least one instance where Mr. McGroarty made a collection on Mr. Miller's account and failed to turn it in. In the opinion of the auditor, the shortages in the account of $30 before Mr. Miller took over, when it was handled by Mr. McGroarty, were theft.
Mr. McGroarty was discharged from employment with Independent Life and Accident Insurance Company approximately one week after the audit was completed.
Mr. Baucom, assistant vice president of the company and custodian of the personnel records, indicated the audit done on Respondent's records revealed a shortage of $361.50. This was subsequently adjusted to $126.18 as a result of the company withholding commissions due Respondent.
On February 4, 1983, Mr. Baucom wrote to the Department of Insurance, State of Florida, requesting to withdraw a charge of deficiency against Respondent previously submitted on December 7, 1981, on the basis that the
company was not satisfied with the documentation of the alleged deficiency. Thereafter, on April 5, 1982, he again wrote the Department of Insurance reinstating the charge based upon subsequent receipt of "satisfactory documentation" and Mr. Miller's "attitude."
Gracie Williams, a policyholder with Independent Life, experienced somewhat of a problem with the company when she and her husband tore down a house on which they had been paying premiums. When the house was removed, they mentioned the fact to Mr. McGroarty, but he did nothing about it. As a result, they paid several months' premiums on property that did not exist. In fact, when Respondent complained about this to Mr. McGroarty, he was told to collect the money or McGroarty would take it from another policy.
Jennie L. Wilder also had difficulties on her policy with Independent Life's agent named "Alligood" (sic). She had paid her premiums for six months in advance, but because the agent delayed remitting the premium, she got credit for only three months.
On the other hand, Catherine C. DiPerna and her husband have been insured with Independent Life for quite a while. Part of that time, the Respondent was her agent/collector. On June 16, 1981, just about the time of the other alleged shortages in Respondent's remittances, she paid her premium payment to Mr. Miller by check. The check was cashed, she did not receive a notice of lapsed policy, nor did she have any problem with her policy, even though on the Ordinary Remittance Report for the same period used by the Petitioner in the allegations relating to Mrs. Robinson shows no money received from the DiPernas.
On March 11, 1981, upon the recommendation of Mr. R. Brenner, an investigator with the Department of Insurance, Respondent went to work for Independent Life as a debit agent in Jacksonville, Florida, under the supervision of Mr. Pat McGroarty, who, also, had had the debit (account) before. After the basic company indoctrination course, Respondent underwent on-the-job training under McGroarty. He never, during the entire time he worked for the company, accepted total responsibility for the account because, in his opinion, there were large discrepancies between the premium receipt cards and the company records when he was assigned the account. Respondent discussed these difficulties with McGroarty and other officials of the company, such as Mr. Ivanoski, Mr. Tharpe, and Mr. Baucom.
In April, 1981, Miller saw that his signature as agent was forged on a policy owned by the Petitioner's witness Cooper on the life of Cooper's nephew, Edward Thomas, who, at all times pertinent, was an inmate in the state penitentiary. When Respondent mentioned this to McGroarty, McGroarty told him that Cooper had forged the names and Respondent was with McGroarty when he delivered the policy to Cooper. This is one of the policies which form the allegation in Count V of the Complaint and about which there is an obvious alteration on the Premium Receipt Book showing an increase in the weekly premium of one cent because of a change from a health policy to a life policy. Other difficulties with this particular account were brought by Miller to the attention of the district manager who forced McGroarty to make up the shortage from his own pocket.
During a part of the time Respondent worked with the company, he also handled fire policies on a temporary license. He found so many irregularities and such out-and-out corruption, he states, that he intentionally failed the state examination for an industrial fire license. Even after instructions came
from the home office terminating Respondent's work in fire insurance, the district manager instructed him to continue to collect fire premiums and turn them over to McGroarty. As a result of all of this, deficiencies show up on his fire accounts for periods after the time he ceased fire business. In fact, documents show collections by Miller on his accounts, even after he left the employ of the company.
Respondent unequivocally denies any wrongdoing with regard to his accounts.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of these proceedings. Section 120.57(1), Florida Statutes.
Respondent is charged in this proceeding with certain violations of the Insurance Code, Chapter 626, Florida Statutes, on the grounds that he received premiums belonging to insurers which he failed to account for or pay to the insurer [Section 626.561(1)]; engaged in unfair or deceptive acts or practices in the business of insurance (Section 626.9521), by knowingly filing false material statements with his supervisor; and thereby violated Sections 626.611(13), 626.621(2), 626.611(5), 626.611(7), 626.611(9), 626.611(10), and 626.621(6). For these alleged offenses, Petitioner seeks to revoke or otherwise discipline Respondent's insurance license.
Section 626.561(1), Florida Statutes, states:
All premiums, return premiums or other funds belonging to insurers or others received by an agent, solicitor or adjuster in transactions under his license in a fiduciary capacity, and the licensee in the applicable regular course of busi- ness shall account for and pay the same
to the insurer, insured or other person entitled thereto.
Section 626.9521, Florida Statutes, provides:
No person shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to
s. 626.9561 to be, an unfair method of competition or an unfair or deceptive
act or practice involving the business of insurance. Any person who violates any provision of this part shall be subject to the penalties provided in s. 627.381.
A "false statement" is defined by Section 626.9541(5)(a), Florida Statutes, as:
Knowingly:
Filing with any supervisory or other public official,
Making, publishing, disseminating, circulating,
Delivering to any person,
Placing before the public,
Causing, directly or indirectly, to be made, published, disseminated, circu- lated, delivered to any person, or placed
before the public, any false material statement.
Section 626.611, Florida Statutes, provides in part that: The department shall deny, suspend, revoke,
or refuse to renew or continue the license
of any agent . . . if it finds that as to the [individual] any one or more of the follow- ing applicable grounds exist:
* * *
(5) Willful misrepresentation of any insurance policy or annuity contract or willful deception with regard to any such policy or contract, done either in person or by any form of dissemination of infor- mation or advertising.
* * *
(7) For demonstrated lack of fitness or trustworthiness to engage in the business of insurance.
Fraudulent or dishonest practices in the conduct of business under the license or permit.
Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license.
* * *
(13) Willful failure to comply with, or willful violation of, any proper order, rule, or regulation of the department or willful violation of any provision of this code.
Section 626.621, Florida Statutes, provides that the Department may revoke the license of any agent if it finds that any of the following grounds for which revocation is not mandatory exists:
Violation of any provision of this code or of any other law applicable to the business of insurance in the course of dealing under the license or permit.
Violation of any lawful order or rule or regulation of the department.
* * *
(6) If in the conduct of business under the license or permit he has engaged in unfair methods of competition or in unfair or deceptive acts or practices, as prohi- bited under part VII of this chapter, or has otherwise shown himself to be a source of injury or loss to the public or detri- mental to the public interest.
In an administrative hearing convened under the provisions of Section 120.57(1), Florida Statutes, the burden of proof is on the party asserting the affirmative; Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (1 DCA Fla. 1977). It is incumbent upon the Petitioner here to establish by legal and competent evidence that the Respondent committed the acts alleged and that those acts violate the statutory provisions cited in the Administrative Complaint. While this burden does not require proof beyond a reasonable doubt, it is, nonetheless, not satisfied by proof which creates an eguipoise; Department of Health and Rehabilitative Services v. Career Service Commission, 289 So.2d 412 (4 DCA Fla. 1974).
Further, this state has consistently recognized the importance of insuring that before an individual is deprived of his opportunity to earn a livelihood in the manner for which he or she was trained, the evidence of wrongdoing on which the deprivation action is based must be substantial. As the First District Court of Appeal has stated:
In a proceeding under a penal statute for suspension or revocation of a valuable business or professional license, the term "substantial competent evidence" takes on vigorous implications that are not so clearly present on other occasions for agency action under Chapter 120. [Bowling v. Department of Insurance, 394 So.2d 165 (1 DCA Fla. 1981)]
In the instant case, the Department has introduced voluminous documentary and considerable testimonial evidence designed to establish that Mr. Miller accepted premium payments from various policyholders and thereafter failed to turn in all that he had collected. However, much of the documentary evidence appears to be flawed. The testimony of several witnesses is less than incriminating. For example: (1) Mrs. Robinson does not know if she is the person who met with Mr. Miller in June, 1981, nor to whom her payment by check was made; (2) Mrs. Bennett never saw the Respondent before he came to her house on New Year's Day, 1983, well over a year after he left employment with the company; she says she did not ever make any payments to him; (3) Mr. Cooper testified under oath that he does not know to whom he made his payments, yet earlier signed a statement he made his payments to Respondent; and (4) Mrs. Reynolds does not know to whom she made her payment or if, in fact, she delivered it herself.
As to the documentary evidence, examination of it reveals alterations (unexplained) and inconsistencies. On the other hand, Mr. Miller steadfastly denied any improprieties on his part except for the intentional failure of the
examination for which he gives a logical explanation. He admitted that in some cases, the initials on the Premium Receipt Books were his. In other cases, they were not, and the testimony of Mrs. Bennett to the effect that she never met the Respondent bears that out. Further, Miller's explanation of the shortages and the situation in which he found himself involving the machinations of Mr.
McGroarty is to a substantial degree confirmed by the testimony of Mr. Fossett, the auditor, to the effect that shortages existed in the account both before and after Miller's time, when McGroarty had the account, and that in his opinion, McGroarty's shortages indicated theft. McGroarty was discharged shortly after the audit.
Mr. Baucom's feeble effort to paint the Respondent in the picture of an embezzler fell far short of its intended goal, in light of all the other testimony and the paucity of any showing that Miller was dishonest.
In summary, there is a clear lack of substantial, competent evidence that Respondent converted any of the funds entrusted to him to his own benefit or failed to remit to the company all funds paid to him [Section 626.561(1), Florida Statutes]. Absent such evidence, Respondent cannot be found guilty of engaging in deceptive practices, filing false reports, lack of trustworthiness or misrepresentation in the practice of insurance, or other violations of the Insurance Code as alleged in the Administrative Complaint.
The Petitioner has submitted a proposed recommended order which includes proposed findings of fact and conclusions of law. The proposed findings and conclusions have been adopted only to the extent that they are expressly set out in the Findings of Fact and Conclusions of Law above. They have been otherwise rejected as contrary to the better weight of the evidence, not supported by the evidence, irrelevant to the issues, or legally erroneous.
Based upon the foregoing Findings of Fact and Conclusions of Law stated above, it is
That the Administrative Complaint against the Respondent dated August 27, 1982, and amended on September 24 and December 28, 1982, be DISMISSED.
RECOMMENDED this 28th day of February, 1983, in Tallahassee, Florida.
ARNOLD H. POLLOCK
Filed with the Clerk of the Division of Administrative Hearings this 28th day of February, 1983.
Rhoda Smith Kibler, Esquire David Yon, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301
S. Perry Penland, Esquire Penland, McCranie & Shad, P.A. Suite 1103, Blackstone Building Jacksonville, Florida 32202
